Experts Lay Out a Blueprint for Legal Sports Betting in Alabama

Now that we know it will be at least until 2024 before Alabama sports betting gets legalized, focus has started to shift toward what exactly needs to happen for the status quo to change. As it stands, sports betting in Alabama has proven to be divisive on a number of fronts. Specifically, not enough was done in the last proposal, Senate Bill 294, to sway those who have long opposed a complete overhaul to the way gambling is viewed within the state constitution.

Something needs to give for many of these sticking points. Certain people may just change their mind on the matter in the next couple of years, but for legal Alabama sports betting to have a real shot at taking effect by 2024, there needs to be more of a consensus. That won't happen without making alterations to the latest proposal.

Luckily for us, experts have started pinpointing the areas in which the most noticeable adjustments must take place. And while all of these issues don't necessarily have surefire solutions, some potential suggestions have been made that might make the issue more palatable to the people who have remained vehemently against it.

The Previous Proposal for Sports Betting in Alabama

The latest proposal for sports betting in Alabama was extensive, largely because it needed to address questions such as which department would oversee the implementation and whether the state needed a lottery system as part of the legalization. However, Amber Hoffman from Gaming Today recently distilled down the primary bullet points of Senate Bill 294:

• The minimum age to place a sports bet is 21;
• Mobile and retail sports betting is allowed;
• $100,000 license fee for a sports operator;
• 20 percent tax on gross revenues paid to the state by sports betting operator;
• Professional and collegiate sports bets, as well as prop bets are permitted.

Most of these guidelines are standard fare for states looking to enter the legal sports betting business. The 20 percent tax on gross revenues is the biggest anomaly; many other states have put that figure at around 10 percent or 15 percent.

When this bill was presented at the latest legislative sessions this past spring, there were rumblings that it had the support necessary to make it on to the November 2022 ballot. But that rumored support evaporated fairly quickly. Alabama officials elected to not even discuss it thoroughly, believing it was a waste of time and wouldn't garner the overwhelming approval it needed to be fast-tracked.

And that begets a simple yet poignant question: Why?

Experts Worry About Alabama's Propose Sports Betting Tax Rate

As it turns out, many experts in the sports betting industry believe House Bill 294 fell off the rails with its proposed tax rate. And believe it or not, the biggest push-back and the most skepticism originated from those who actually support the legalization of sports betting.

Typically, the states assessing 20 percent or higher tax rates on all sports betting revenue are from markets in which there is intense competition to operate. These states, specifically, are in high demand among commercial sportsbooks who see the chance to drum up billions of dollars in annual revenue.

Alabama doesn't currently profile as one of those desired states. Sportsbooks will want to operate within state lines, because they want to have access to every market. But Alabama's sports betting appeal is heavily contingent upon their college football fanbase, since they do not have a wealth of pro sports franchises under their umbrella.

In most cases, niche markets such as Alabama aren't in a position to tax every operator—casinos and online bookmakers alike—at such a high rate. You generally see proposals fall in the 8 percent to 10 percent range for these cases. Given that Senate Bill 294 laid out a tax rate roughly double that, many officials in favor of sports betting worried they would be wasting their time and effort by deterring commercial operators from competing for licenses. 

Indeed, Alabama would still carve out extra revenue, but it wouldn't be nearly as lucrative as other smaller states. Sports betting supporters were also worried that tribal casinos would elect not to apply for gaming licenses because of the high tax rate. So, if Alabama wants to get more supporters on their side for Senate Bill 294, they'll need to tweak the terms or raw numbers on their tax rate.

Can Alabama Sports Betting Overcome Tax Rate Concerns?

Haggling over sports betting tax rates is an issue that could take years to resolve. The lack of traction for Senate Bill 294 this past spring suggests that there isn't much wiggle room among those who support it. If you lower it, there's a very real chance you lose what appears to be lukewarm support in the first place.

Still, Alabama state senator Greg Albritton recently said he plans on resurfacing the proposal at the next legislative session. And as more and more states move to legalize sports betting, Alabama will be able to see the profits enjoyed from smaller markets that only tax operators somewhere between 8 percent and up to 15 percent.

Could that be the push needed for the state to renegotiate the current proposal? That much isn't yet clear. But the primary roadblock facing Alabama sports betting is now known, which provides a blueprint for dealing with it. That's important.

In the meantime, residents of Alabama aren't completely out of luck. There are plenty of sites from our reviews of the top online sportsbooks willing to let those who live in the Heart of Dixie set up accounts and place wagers. We highly recommend everyone in Alabama explore these options. After all, the best case scenario still doesn't have the state legalizing sports betting prior to 2024.

Take a look at this list of the top online sportsbooks so you can decide which one works for all of your sports betting needs: